By Tharuniyaa Lakshmi
Aug 24 (Reuters) – European shares were little changed on Monday as higher gold prices lent support, though uncertainty surrounding impending U.S. sanctions on Iran kept risk appetite in check.
The pan-European STOXX 600 was up 0.03% at 654.38 points, as of 0837 GMT.
Basic Resources rose 0.7% as gold prices climbed on a weaker dollar. [GOL/]
Travel and Leisure was the top-performing sector, rising 1% as lower oil prices boosted sentiment towards the energy-sensitive sector.
The U.S. threatened Iran with what it called “the greatest financial offensive ever marshalled” as it prepared to roll out economic sanctions targeting Iran’s trade partners, while Iran vowed to shut down all oil exports from the Gulf “if the economic war continues.”
Energy shares were the worst-performing sector, falling 0.6%, tracking Brent crude prices, which were at around $93 a barrel. [O/R]
Automobiles and parts fell 0.5%, despite data showing European EV sales picked up in July.
The European benchmark ended lower last week as higher oil prices, rising U.S. bond yields and escalating Middle East tensions stoked inflation concerns, prompting investors to price in a more hawkish path for central banks including the European Central Bank.
Money markets are pricing in a more hawkish ECB, betting geopolitical tensions could keep price pressures elevated and drive the deposit rate close to 3% by late 2027. Investors are also looking ahead to the central bank’s September meeting after policymakers tightened policy in June following an energy shock linked to the U.S.-Iran conflict.
Market participants will also be hoping for clarity on the U.S. interest rate outlook when Federal Reserve Chair Kevin Warsh speaks in Jackson Hole, Wyoming, on Friday.
“Warsh has been opposed to expanding balance sheet which takes away one of the support measures for the long end. Warsh is likely to focus on credibility and emphasize that the Fed is ready to act on inflation to control the long end of the curve,” Mohit Kumar at Jefferies said =.
Meanwhile, the tech sector was on edge ahead of Nvidia’s results on Wednesday, with investors worried that it would be difficult for the chipmaker to meet stratospheric expectations.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)
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